ADDIS ABABA: Home to several military bases, the city state of Djibouti, is attracting the world’s attention as it positions itself as a major geopolitical player by leveraging on its rich location.
The US, France, Germany, Japan and Italy all maintain a presence there, but with China now setting up shop, what has been a cosy co-existence may become a bit uncomfortable.
But it is Djibouti’s relationship with neighbouring Ethiopia that is worth keeping a closer eye on for Africa, providing a successful pilot of sorts for the regional integration effort that continues to be the continent’s developmental Holy Grail.
Chinese—who else—engineers are putting up the finishing touches on an electrified railway between the two countries, which when complete will cut transport time for goods to about 10 hours, from the current two days they take on trucks through often torturous mountain passes.
In some ways it is a relationship of necessity—nearly 90% of Ethiopian imports come through Djibouti’s port, serviced by at least 1,500 trucks daily. And as Ethiopia’s state-dominated economy continues to boom, this number is projected to grow to 8,000 in just five years.
In November, the first train started operations, relying on diesel as the power lines come up, and it could be life-saving. It is actually an old track that fell into a state of disuse, but the work on it now means it has at least seven times more capacity, capable of carrying 3,500 tonnes of goods.
It could also be life-saving. Ethiopia, currently battling its harshest drought in nearly half a century and already sub-Saharan Africa’s biggest importer of wheat, has doubled its purchases from international markets.
The result has been a backlog of ships waiting to offload at least 400,000 tonnes of grain in Djibouti, a discharging process that could in the best case scenario take six weeks. Count the order lead time and then transport via trucks and the three months could be too long for the estimated 10 million people living with hunger in the country, an increase by half since August as the effects of El Nino add to changing weather patterns in the region.
It is hard to underestimate the importance of the trans-border train, even for Djibouti which sells the bulk of its logistics services to Ethiopia.
It does not stop there: a second line would connect to the northern Ethiopian town of Mekele, with Djibouti authorities looking to extend it to South Sudan, Central African Republic (CAR) and all the way to the Gulf of Guinea in West Africa.
The potential of such infrastructure projects to further bind the continent where intra-regional trade lags globally at less than 15%, has now received major backing through new African Union-backed research.
Africa Regional Integration Index
For the first time, the continent has come up with an integration index that is meant to show countries the possibilities of more intra-regional projects, while providing the hard data that has been missing in tracking the process of continental integration, as the continent seeks a “Made in Africa” brand to counter turbulent external markets and volatile currencies.
The inaugural Africa Regional Integration Index is focused on the eight major blocs that prop up the AU, and which are known as Regional Economic Communities (RECs).
The index is compiled by the AU, the African Development Bank (AfDB), and UN Economic Commission for Africa (UNECA).
The biggest surprise of the day was the identification of the Intergovernmental Authority on Development (IGAD) as the best performer in regional infrastructure, one of five categories the index measures and the most visible face of continental integration.
IGAD is at times overshadowed by other blocs, but got a new lease of life when it was picked to lead efforts to resolve South Sudan’s often-intractable conflict.
Its eight members include both Ethiopia and Djibouti, the port city which perhaps fittingly houses its headquarters.
“When regional infrastructure works better, business costs fall as transport corridors speed goods across boundaries and more customers access services as mobile phone roaming expands,” the authors say.
The AU’s flagship Agenda 2063 growth plan has identified connecting the continent’s capitals and financial centres with high-speed rail.
Such a project may take off faster in West Africa, where most states scored highest on another category—that of the free movement of people due to having implemented a free movement of persons category that allow citizens to travel without a visa.
East African Community leaders: The bloc was the highest scoring in value addition. (Photo/YKM/FB).
The issue of visa obstacles continues to grate, with Europeans and Americans finding it easier to move on the continent, as African investors such as Aliko Dangote find themselves waiting for weeks for the document—a scenario the AfDB’s statistics chief Charles Lufumpa terms as “unacceptable”.
“When visa or work permit restrictions are cut, gains in time and resources open up, which supports more competitive businesses and economies,” the index noted, while allowing for skills gaps to be plugs and talent to move more easily.
A third category also had experts at the report’s launch purring—that of “productive integration”. A measure of value addition, or the intermediate goods or services that a business uses towards the finished article, it has been a source of angst on the continent, as data shows resource exports still dominate.
The five-member East African Community (EAC) was the highest scoring in value addition, but perhaps interesting was the placing of Benin above Nigeria in their shared ECOWAS bloc, explained by its proximity to the regional giant, to which it re-exports manufactured products.
Kenya tops blocs
Kenya ranked highest in three of the four blocs it is a member of—EAC, IGAD and Comesa, the Common Market for Eastern and Southern Africa.
Other categories index were trade integration, on which the EAC was the top performer, and financial integration, which all blocs are lagging on, it being in the nascent stages.
Another surprise was that the biggest economies are not the best integrated—Algeria, DR Congo, Egypt, Ethiopia, Nigeria and Tanzania all have room for “more progress”, the index, developed jointly with the AfDB and the UN’s Economic Commission for Africa, notes.
But with 28 countries categorised as “deeply integrated” the train towards the envisaged all-encompassing Africa Economic Community is on the move, but as the wide disparities such as with Central Africa show, it is yet to wean itself off good old diesel.